July 9, 2008 – Semiconductor foundries’ recent plans to step up pricing may be stalled due to softer-than-anticipated demand projections for 3Q, according to one analyst firm.
Checks with foundries suggest that most will meet 2Q wafer shipments, but are downwardly revising their outlook of 3Q shipments from initial 5%-10% growth expectations, thanks to softness from a list of customers including AMD, IBM, Marvell, Mediatek, and Novatek, and Realtek, write FBR Research analysts Mehdi Hosseini and Rafi Hassan in a research report.
TSMC, for example, will see 10% shipment growth in 3Q thanks to business from ADI, AMD/ATI, CSR, Himax, Intel/Spansion (for NOR flash), Marvell, and TI (and despite weakness from Nvidia and Qualcomm). But the top Taiwan foundry also expects margins to remain “flattish” — which suggests the company is not increasing ASPs despite its claims to do so in recent weeks. “We believe the best the company would be able to achieve is to stabilize the blended ASPs,” even as utilization rates inch above 95%, they write.
For UMC, checks suggest a 12% shipment increase in 2Q, slower than 13%-14% expectations, but 3Q shipments also are seen softer, up only 5% Q-Q, the low end of projections, due to weakness from customers such as Mediatek, Novatek, and Realtek.
Chartered enjoyed 20% Q-Q shipment growth in 2Q but will slow to 10% in 3Q, similarly because of lowered forecasts from customers IBM and AMD, they write. “We believe Broadcom is aggressively pushing the company to move into advanced technology node so that it could leverage Chartered Semi against other foundries for a better pricing scheme,” they added.
Finally, the FBR analysts expect to see some DRAM wafers in SMIC’s 2Q and 3Q shipments despite its stated exit from that business last quarter, which suggests the company is challenged to transition its 300mm fab from memory to logic, the analysts note. SMIC should double wafer shipment growth to 12% in 3Q, since of all its major customers only Marvell is lowering its wafer shipment demand.